Page 46 - Buy Russia - bne IntelliNews monthly magazine April 2017

46 I Central Europe bne April 2017
The Paks nuclear plant.
Central Europe’s nuclear gamble
Tim Gosling in Prague
The European Commission gave
the final nod to Hungary’s deal with Russia to expand the Paks nuclear plant in early March. The approval may give other Visegrad states struggling to come up with funding plans for their own projects food for thought.
Budapest scrapped an international tender on Paks 2 in early 2014, instead handing the project to Russian nuclear agency Rosatom in return for €10bn in financing towards the €12.5bn project’s costs. Accepting Hungary’s claim that as Paks 1 features Russian VVER reactors so too must the expansion, Brussels closed its probes on both competition and state aid grounds in recent months.
Critics point out that Hungary already relies on Russia for 60% of its energy, and claim the deal will only hand Mos- cow more leverage. The financial risks
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are also huge, given the weakness of power markets and EU stipulations that Paks 2 production must be sold on the open market.
Rather than face yet another fight with Budapest, the wearied response in Brus- sels behind closed doors is said to have been: “It’s your funeral”.
Still, with no one willing to pick up the tab for a CZK300bn (€11bn) expansion of the Czech nuclear fleet – the leading element in the country’s long-term strat- egy – Prague will have noted events in Hungary. Under the Czech plan, nuclear energy would provide 50% of the coun- try’s power by 2040, a rise of 15pp.
With elections due in October, the expansion of the Dukovany and Temelin NPPs had already returned to Czech headlines ahead of the Paks 2 approval.
Pressured by minority shareholders, state-controlled energy group CEZ says it cannot build the new units without government support. Prague has recent- ly reiterated its stance that the state will offer no guarantees.
It was just such a standoff that saw
CEZ pull a 2014 tender, worth around €8bn, to build two new units at Temelin. Despite the disappointment, the two finalists in that scrapped competition – Russian state nuclear agency Rosatom and Japanese-owned Westinghouse – both met with the Ministry of Industry and Trade (MIT) in February to discuss the first project in the strategy: a new reactor at Dukovany.
Suitors from China, France and South Korea also held talks. The Czech govern- ment is yet to comment on whether the meetings trimmed the field.